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You aren't locked out of 3.5, or at least not the d20 games rules which is essentially what 3.5 became. I don;t think WotC can revoke that license, this new one they are putting out is what they are applying to the 4.0 and any future games they create.

A: In addition to following all the rules of the OGL for any Open Content you use, the d20 System Guide doesn't let you describe the process for creating a character, describe the process for applying experience to a character, and cannot be an interactive game.

This doesn't make sense to me. There's dozens of games out there that use d20 rules. (D20pro being the most obvious one.) Those are interactive games. They allow character creation and such.

I believe what they are saying is that your game can include those options, but can't explain the mechanics to the user. In other words you can include those functionally, but the rules governing them need to be kept hidden.

The next question has this in the answer:

In exchange for using the d20 logo you are prohibited from making a product that replaces the core rulebooks.

So if you document or describe the process of making the character, then you are replacing the rulebook. If instead you merely present the user with a list of valid choices they can make without giving too much detail about why these are valid and otherones aren't, then you're in the clear since the user will need to open the rulebooks to find out what the story is.

You're jumping topics there. The section that said you can't describe character creation was for video games specifically, as far as I can tell there's no such restrictions on books. Which means a PDF is exempt from that restriction.